Joe Biden has signed an executive order that bans Americans from investing in a number of Chinese companies with alleged ties to defense or surveillance technology sectors, in a move that analysts said would further complicate Washington’s trade relationship with Beijing.
The US administration said it will expand the scope of a legally flawed Trump-era order, the US treasury will enforce and update on a “rolling basis” the new ban list of about 59 companies.
Beijing has condemned the move on Friday, accusing Washington of “overextending the concept of national security and abusing its national power”. “China urges the US to respect market rules and principles and rescind the so-called list that suppresses Chinese companies,” said Wang Wenbin, the foreign ministry spokesperson.
Washington’s latest move came on the same day that China’s commerce ministry said the two countries have resumed “normal communication”, following recent high-level meetings between the two countries’ trade and financial officials.
In the past week, China’s vice-premier Liu He held calls with US trade representative Katherine Tai and US treasury secretary Janet Yellen. Chinese commerce ministry said both sides exchanged “candid” views on a range of issues.
Yet, experts said that despite the optimism in Beijing, Washington’s latest move could add further complication into the bilateral relationship.
Biden’s latest order prevents US investment from supporting the Chinese military-industrial complex, as well as military, intelligence and security research and development programs.
“In addition, I find that the use of Chinese surveillance technology outside [China] and the development or use of Chinese surveillance technology to facilitate repression or serious human rights abuse constitute unusual and extraordinary threats,” Biden said.
A White House fact sheet on the order said the policy would take effect for those companies listed on 2 August.
Major Chinese firms included on the previous defense department list were also placed on the updated list, including Aviation Industry Corp of China (AVIC), China Mobile Communications Group, China National Offshore Oil Corp (CNOOC), Hangzhou Hikvision Digital Technology, Huawei Technologies and Semiconductor Manufacturing International Corp (SMIC).
SMIC is key to China’s national drive to boost its domestic chip sector.
“We fully expect that in the months ahead … we’ll be adding additional companies to the new executive order’s restrictions,” one of the senior officials said.
A second official told reporters that the inclusion of Chinese surveillance technology companies expanded the scope of the Trump administration’s initial order last year, which the White House argues was carelessly drafted, leaving it open to court challenges.
The president has been reviewing a number of aspects of US policy toward China, and his administration had extended a deadline for implementation set by Donald Trump’s order while it crafted its new policy framework.
Analysts said the move is part of Biden’s broader series of steps to counter China, including reinforcing US alliances and pursuing large domestic investments to bolster American economic competitiveness, amid increasingly sour relations between the world’s two most powerful countries.
Reuters contributed to this report